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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Federal Financial Management, Government
Information, Federal Services, and International Security, Committee
on Homeland Security and Governmental Affairs, United States Senate:
For Release on Delivery:
Expected at 2:30 p.m. EDT:
Tuesday, March 2, 2011:
DOD Education Benefits:
Further Actions Needed to Improve Oversight of Tuition Assistance
Program:
Statement of George A. Scott, Director:
Education, Workforce, and Income Security:
GAO-11-389T:
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss the Department of Defense's
(DOD) oversight of its Military Tuition Assistance (TA) Program. In
fiscal year 2010, the TA Program provided $531 million in tuition
assistance to approximately 302,000 service members who elected to
pursue off-duty[Footnote 1] postsecondary education.[Footnote 2] DOD
offers these benefits to service members in order to help them fulfill
their academic goals and enhance their professional development.
Program oversight for voluntary education programs is the
responsibility of the Undersecretary of Defense for Personnel and
Readiness.[Footnote 3] In addition, the military services are
responsible for establishing, maintaining, operating, and implementing
the programs at 350 education centers on military installations
worldwide.[Footnote 4] Education centers are managed by an education
services officer (ESO) and staff, such as education guidance
counselors.
Today I will discuss (1) DOD's oversight of schools receiving TA funds
and (2) the extent to which DOD coordinates with accrediting agencies
and the Department of Education (Education) in its oversight
activities. This testimony is based on GAO's recent report, titled DOD
Education Benefits: Increased Oversight of Tuition Assistance Program
Is Needed.[Footnote 5] Our report and testimony are based on work we
performed between August 2010 and February 2011. Our work was
performed in accordance with generally accepted government auditing
standards.
In summary, DOD is taking steps to enhance its oversight of schools
receiving TA funds. However, we found that areas for improvements
remain. Specifically, DOD could benefit from a systematic, risk-based
oversight approach, increased accountability in its education quality
review process, and a centralized system to track complaints. We also
found that DOD's limited coordination with accrediting agencies and
Education may hinder its oversight efforts. We make several
recommendations to DOD that are intended to improve its oversight of
schools receiving TA funds. DOD agreed with our recommendations.
DOD's Oversight Could Benefit from a Systematic, Risk-based Approach,
Increased Accountability in its Education Quality Review Process, and
a Centralized System to Track Complaints:
DOD does not systematically target its oversight efforts based on
factors that may indicate a higher risk for problems. Instead, DOD's
oversight policies and procedures vary by schools' level of program
involvement and schools that operate on base are subject to the
highest level of oversight, as shown in figure 1.
Figure 1: DOD Participation Requirements by School Level of Program
Involvement:
[Refer to PDF for image: illustration]
Level of oversight: progresses from Low to High:
All school participants:
* Must be accredited by an agency recognized by the Department of
Education.
Schools that belong to Servicemembers Opportunity Colleges (SOC)[A]:
* Sign a SOC agreement;
* Subject to an accreditation check every 2 years;
* Undergo verification of their loan default rates.
Schools with signed memorandums of understanding (MOU) with
installations:
* Must be members of SOC;
* Must be chartered or licensed by a state government;
* Must abide by MOU agreement with base commander that governs
solicitation policies, reporting requirements on academic offerings
and student academic status, and other terms of operations on the base;
* Were subject to Military Installation Voluntary Education Review
(MIVER)[B].
Source: GAO analysis of program policies and testimonial evidence from
DOD and SOC officials.
[A] SOC is funded by DOD through a contract with the American
Association of State Colleges and Universities. SOC functions in
cooperation with 15 higher education associations, DOD, and active and
reserve components of the military services to expand and improve
voluntary postsecondary education opportunities for service members
worldwide.
[B] MIVER had two purposes: (1) to assess the quality of selected on-
installation voluntary education programs and (2) to assist in the
improvement of such education through appropriate recommendations to
institutions, installations, DOD, and the military services. DOD
contracted with the American Council on Education (ACE) to administer
the MIVER.
[End of figure]
DOD is taking steps to address the varying levels of oversight and
create a more uniform set of oversight policies. DOD recently
published a proposed rule for its voluntary education programs in the
Federal Register for public comment.[Footnote 6] Included in this
rule, among other things, are guidelines for establishing,
maintaining, and operating voluntary education programs, including
instructor-led courses offered on and off installations, distance
education courses,[Footnote 7] and the establishment of a DOD
Voluntary Education Partnership memorandum of understanding (MOU)
between DOD and all educational institutions receiving TA funds. DOD
estimates that this new rule will become effective at the beginning of
2012.
While DOD is creating more uniform oversight policies, its oversight
activities still lack a risk-based approach. While DOD monitors
enrollment patterns and schools' funding levels, and addresses
complaints about postsecondary schools on a case-by-case basis, its
oversight activities do not include a systematic risk-based approach
that considers these factors when targeting schools for review.
[Footnote 8] Collectively, this information could provide DOD with
data that can be used to better target schools for review or inform
other oversight decisions.
Until recently, DOD depended on an education quality review process
that was narrow in scope and needed increased accountability. From
1991 to 2010, DOD relied on the Military Installation Voluntary
Education Review (MIVER) to ensure quality education services for its
service members.[Footnote 9] MIVER was limited to institutions that
offered face-to-face courses at military installations and did not
account for distance learning courses paid for with TA funds. In
fiscal year 2009, about $360 million of TA funds paid for distance
learning courses (71 percent of courses taken by service members).
Moreover, three of the four military services lacked a process to
follow up on and respond to MIVER findings. During the MIVER review
process, reviewers developed a report listing their recommendations,
commendations, and observations of the educational services provided
by the installation and the institutions offering courses at that
installation. MIVER final reports were distributed to the institutions
and installations that were reviewed as well as DOD officials and its
military services. The Army was the only military service that
required installations that received a site visit to submit a follow-
up report indicating actions taken in response to the MIVER reviews.
One DOD official reported that MIVER reports were helpful in
identifying the strengths, weaknesses, and areas for improvement in
DOD educational programming, and ESO's told us that some
recommendations were implemented with successful results.[Footnote 10]
Given that there was no DOD-wide requirement to track the outcomes of
MIVER recommendations and some of the military services did not
require schools and installations to formally respond to MIVER
findings, it is unclear the extent to which recommendations that could
improve the quality of education services offered at schools and
installations were addressed.
DOD is developing an expanded review process to strengthen its
oversight of postsecondary institutions. Under this new review
process, Military Voluntary Education Review (MVER), all institutions
receiving TA funds, regardless of whether the school delivers courses
face to face or by distance education, will be subject to a review.
The contract for MIVER ended in 2010, and DOD is currently in the
process of obtaining a contractor for its new review process.
According to DOD, a contractor will be selected in 2011 and the new
third-party review process will commence on October 1, 2011.
While DOD has several mechanisms for service members to report
problems associated with their TA funding, it lacks a centralized
system to track complaints and how they are resolved. If service
members have a complaint or issue regarding a school, they can speak
with a counselor at their installation's education center, contact a
representative from SOC, use the call center service,[Footnote 11] or
use the Interactive Customer Evaluation (ICE)--DOD's online system to
collect customer feedback.[Footnote 12] DOD reported that most of the
complaints it receives are administrative in nature, such as billing
issues. However, a few complaints involve schools' improper or
questionable marketing practices, such as school representatives
conducting marketing activities at installations without the
installation commander's or ESO's permission. According to DOD
officials, DOD's practice is to have education center staff resolve
complaints at the installation level and to only elevate issues that
warrant greater attention to the military service level. However, DOD
and its military services do not have a formal process or guidance in
place to assist education center staff in determining when they should
elevate a complaint to their military service chief or DOD. Without
policies and a centralized system to track complaints and their
outcomes, DOD may not have adequate information to assess trends
across its military services or determine whether complaints have been
adequately addressed.
DOD's Limited Use of Information from Accreditors and Education May
Hinder Its Efforts:
DOD's oversight process does not take into account accrediting
agencies' monitoring results of schools. Schools can be sanctioned by
accrediting agencies when they fail to meet established accrediting
standards, such as providing sound institutional governance, accurate
information to the public, and offering effective educational
programs. For example, on the basis of an accrediting agency's
monitoring results that were publicly available, a school was warned
it could be at risk of losing its accreditation in part because it
lacked evidence of a sustainable assessment process to evaluate
student learning. The school was required to submit a report to the
accrediting agency providing evidence of its process and that the
results were being used to improve teaching, learning, and
institutional effectiveness. According to accrediting agency
officials, schools are given multiple opportunities to correct
deficiencies before having accreditation revoked and can be sanctioned
for up to 2 years.[Footnote 13]
DOD also does not use accrediting agency information about schools'
substantive changes in its oversight efforts. DOD does not currently
require schools to have their substantive changes approved by their
accrediting agency in order to receive TA funds. Schools may introduce
new courses or programs significantly different from current
offerings, and such changes may be considered substantive and outside
the scope of an institution's accreditation. Unlike DOD, Education
requires a school to obtain its accrediting agency's approval on any
substantive change and report this information to Education for
approval before it can disburse federal student aid under the Title IV
programs[Footnote 14] to students enrolled in new courses or programs
considered to be substantive changes.[Footnote 15] DOD recently
proposed that tuition assistance funds should be available for service
members participating in accredited undergraduate or graduate
education programs and that approved courses are those that are part
of an identified course of study leading to a postsecondary
certificate or degree.[Footnote 16] According to Education, schools
seeking Title IV funds generally wait for approval before enrolling
students in such new courses and programs, but can collect other
federal education assistance and out-of-pocket funds during that time.
Students enrolled in unapproved courses or programs have less
assurance that they are receiving a quality education, according to
Education officials. On the basis of Education's fiscal year 2009
Program Compliance Annual Report, we determined that there were over
1,200 substantial changes processed in fiscal year 2009.
DOD does not utilize information from Education's monitoring reviews
to inform its oversight efforts. This information can alert DOD to
problems at schools that may affect the quality of education provided
to students, including service members. Education determines schools'
initial eligibility to participate in federal student aid programs
through eligibility reviews and continuing eligibility through program
reviews, compliance audits, and financial audits. The results of these
oversight activities provide additional insight into a school's
financial stability, quality of education, and compliance with
regulations that provide consumer protections for students and the
federal investment. See table 1 for a summary of Education's oversight
activities.
Table 1: Education's Monitoring of Schools Participating in the Title
IV Program:
Focus of oversight: Financial health[A];
Types of school monitored: Private nonprofit and for-profit;
Activity: Financial responsibility: Education determines schools'
financial responsibility by assessing its cash reserves and the
school's history of meeting its past financial obligations. In 2008
and 2009, at least 249 schools failed the financial stability test,
and Education placed some of these schools on heightened monitoring.
Focus of oversight: Related to quality of education;
Types of school monitored: All schools;
Activity: Student loan cohort default rate: According to Education
officials, Education uses student loan cohort default rates implicitly
as a proxy for education quality. A large number of students in
default may indicate that a school may be poorly preparing students
for employment. Schools with default rates above certain thresholds
lose eligibility to participate in Title IV programs.
Focus of oversight: Related to quality of education;
Types of school monitored: For-profit only;
Activity: 90/10 rule: In order to participate in Title IV programs,
for-profit schools cannot receive more than 90 percent of their
revenue from Title IV funds.[B] Between 2003 and 2008, 7 schools lost
eligibility for federal student aid because of noncompliance with the
90/10 rule.
Focus of oversight: Consumer protection related to schools' recruiting
practices;
Types of school monitored: All schools;
Activity: Incentive compensation: Schools participating in Title IV
programs are prohibited from compensating recruiters based directly or
indirectly on their success in enrolling students or securing
financial aid for them. Between 1998 and 2009, Education substantiated
incentive compensation violations at 32 schools.[C]
Focus of oversight: Consumer protection related to schools' recruiting
practices;
Types of school monitored: All schools;
Activity: Misrepresentation: Institutions participating in Title IV
programs may not engage in substantial misrepresentation of the nature
of the institution's educational program, its financial charges, or
the employability of its graduates. According to Education's
compliance data, Education found at least 16 misrepresentation
violations between 2004 and 2009 through compliance audits and closed
program reviews.
Source: GAO analysis of laws and regulations, as well as testimonial
evidence and program documents from Education.
[A] Education considers a public institution financially responsible
if it demonstrates legal designation as a public institution and has
not violated past performance requirements.
[B] DOD tuition assistance funds are counted toward meeting a
proprietary institution's minimum of 10 percent non-Title IV funds. A
school's revenue percentage must be calculated in accordance with 34
C.F.R § 668.28.
[C] GAO, Higher Education: Information on Incentive Compensation
Violations Substantiated by the U.S. Department of Education, GAO-10-
370R (Washington, D.C. Feb. 23, 2010).
[End of table]
The results of Education's monitoring activities can provide DOD and
its military services with additional insight into a school's ability
to provide a quality education and services to students. Schools that
are financially unstable or fail to comply with student loan default
rate and 90/10 requirements may be unable to fulfill their promises to
provide students with quality program offerings, according to
Education. Military education center staff we spoke with at two
military installations indicated that ensuring the consumer protection
of service members amidst sometimes deceptive recruiting practices of
some schools can be a challenge. Education's monitoring results in
these areas could provide relevant information to help DOD and its
Military Services to better target their oversight and provide
additional consumer protection for service members.
DOD may also be able to leverage information from Education's ongoing
efforts to improve oversight of distance education. Education has
recently developed additional provisions to better address distance
education. For example, Education has developed a review process and
guidance for its staff to assess the integrity of distance learning
programs, such as whether schools have a process to verify student
attendance. DOD has proposed that distance education schools be
subject to MVER reviews by 2012, but currently does not generally
evaluate these courses.[Footnote 17]
Conclusions:
In fiscal year 2010, nearly 302,000 service members relied on TA funds
to help further their academic and professional goals. The amount of
TA funding going toward distance learning programs creates new
oversight challenges for DOD and its military services, especially
since DOD oversight has primarily focused on schools offering
traditional classroom instruction on military installations.
Although DOD is taking steps to improve its oversight of schools
receiving TA funds, increased oversight is still needed to remedy gaps
in the accountability of its third-party quality review process and
the process to address complaints against schools. Additionally, DOD
could further enhance its oversight efforts by leveraging information
from accrediting agencies and the results of oversight actions by the
Department of Education. We are recommending that DOD take a number of
actions to improve its oversight of schools, including (1) improving
accountability for recommendations made by third-party education
quality reviews, (2) developing a centralized process to track
complaints against schools, (3) conducting a systemic review of its
oversight processes, and (4) taking actions to ensure TA funds are
used only for accreditor approved coursed and programs. Measures like
these could strengthen DOD's oversight activities and help ensure that
TA funds are used properly and help enable service members to receive
a quality education. DOD concurred with our recommendations.
Mr. Chairman, this concludes my prepared remarks. I would be happy to
answer any questions that you or other members of the subcommittee may
have.
For further information regarding this testimony, please contact
George A. Scott, (202) 512-7215 or ScottG@gao.gov. Contact points for
our Office of Congressional Relations and Public Affairs may be found
on the last page of this statement. Individuals who made key
contributions to this testimony include Tranchau (Kris) Nguyen
(Assistant Director), Raun Lazier (Analyst-in-Charge), James Bennett,
Jessica Botsford, Susannah Compton, Catherine Hurley, Edward (Ted)
Leslie, Katya Melkote, and Luann Moy.
[End of section]
Footnotes:
[1] DOD defines "off-duty time" as the time when service members are
not scheduled to perform official duties.
[2] TA funds may be used for educational activities such as (1)
completion of an associate's degree, bachelor's degree, or master's
degree; (2) for courses leading to technical, vocational, or
professional certificate or license; (3) building academic foreign
language skills when not part of a degree program; and (4) to pursue
prerequisite courses for academic skill development or preparation for
a degree program, according to the Joint Service Uniform Tuition
Assistance Policy.
[3] DOD Directive 1322.08E (May 3, 2010) and DOD Instruction 1322.25
(April 23, 2007).
[4] Education centers located on military installations are equipped
with office space, classrooms, laboratories, and other features to
conduct voluntary education programs and provide on-installation
classes.
[5] [hyperlink, http://www.gao.gov/products/GAO-11-300] (Washington,
D.C.: Mar. 1, 2011).
[6] Voluntary Education Programs, 75 Fed. Reg. 47,504 (Aug. 6, 2010)
(to be codified at 32 C.F.R. pt. 68).
[7] DOD defines "distance education" as the delivery of education or
training through electronically mediated instruction, including
satellite, video, audio graphic, computer, multimedia technology, and
other forms of learning at a distance, such as correspondence and
independent study.
[8] According to the following report, GAO, Internal Control:
Standards for Internal Control in the Federal Government, [hyperlink,
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.
November 1999), to better achieve their missions and improve
accountability, federal agencies are required to employ certain
internal controls, including assessing the risk agencies face from
both external and internal sources. Applying the federal risk
assessment standard to the TA Program suggests that DOD needs to
consider all significant interactions between its entity and other
parties, as well as internal factors at both the entitywide and
activity level. Risk identification methods may include qualitative
and quantitative ranking activities, and consideration of findings
from audits and other assessments.
[9] The most recent MIVER contract was a 4-year contract (January 1,
2007, to December 31, 2010) with a total value of $3,743,440.
[10] The military services also had the option to request a MIVER
revisit. During a revisit, a MIVER team would return to the
installation to determine the extent to which the recommendations had
been implemented. The revisits usually occurred in cases where the
original MIVER visit resulted in many negative findings and
commensurate recommendations.
[11] The military services established call centers to handle issues
such as complaints related to the TA Program, according to DOD
officials.
[12] ICE is an online portal operated by DOD to collect feedback on
DOD products and services, including educational programming.
[13] Accrediting agencies may also be challenged in their decisions to
revoke a school's accreditation, and legal proceedings may take a
number of years to be finalized.
[14] Title IV of the Higher Education Act of 1965 (HEA), as amended,
authorizes financial assistance to help students and families pay for
postsecondary education through student grants and loans, such as Pell
Grants for low-income students, PLUS loans to parents and graduate
students, and Stafford loans.
[15] Education requires accrediting agencies to have substantive
change policies in place to ensure that any substantive change to an
institution's educational mission or programs does not adversely
affect its capacity to continue to meet its accrediting agency's
standards. In order to be recognized by Education, accrediting
agencies must require an institution to obtain the agency's approval
of a substantive change, and have a definition of substantive change,
which includes such changes as any change in the established mission
or objectives of the institution; any change in the legal status, form
of control, or ownership of the institution; the addition of courses
or programs that represent a significant departure from the existing
offerings of educational programs; or method of delivery; from those
that were offered when the agency last evaluated the institution, or
the addition of programs of study at a degree or credential level
different from that which is included in the institution's current
accreditation or pre-accreditation.
[16] Voluntary Education Programs, 75 Fed. Reg. 47,508 (Aug. 6, 2010)
(to be codified at 32 C.F.R. pt. 68).
[17] A school on a military installation selected for a MIVER review
were subject to questions MIVER developed for distance education
providers, such as how to verify the identity of students enrolled in
online courses.
[End of section]
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